Property Questions Answered
02 April 2021
What is the property market like just now?
The opening up of the market at the end of June 2020 saw an immediate and what has proved to be sustained, mini-property boom. It could have been anticipated that the numbers of properties coming to the market would be significant, but what perhaps was not anticipated was the extent of pent-up demand among buyers that has fuelled a marketplace where, in many areas, supply has struggled to keep up with demand. That has led to an increase in prices which in some areas of Scotland, including Edinburgh and the Borders , have been significant. In Dundee and Angus, the year on year average price rise to the end of December, was 6.8%. Closing dates abound and to date, the market for properties from the smaller flat to the top end home remains extremely busy, with sales only restricted by the number of homes coming to the market. Stocks of properties are currently low, with many potential sellers understandably reluctant to come to the market whilst the present restrictions remain in force. Demand from buyers, however, remains undiminished.
Is now a good time for first time buyers to buy a house?
First time buyers have played a large part in driving the market. Part of this has been due to the availability of Government Assistance through the Help to Buy ISA scheme whereby the Government would “top up” a first time buyer’s deposit by 25% of the amount saved. That scheme is, unfortunately, now closed to new savers, though it has been replaced in part by the (slightly less attractive) Lifetime ISA scheme. The First Homes Fund (a secured, share equity scheme) set up by the Scottish Government to assist first time buyers by providing cash of up to £25,000.00 to assist in the purchase of a first home, proved hugely popular. The scheme was closed to applications in October, but has now re-opened for applications to assist with purchases that will complete on or after 1st April 2021. Funding is limited to £60m. in the financial year 2020/21, and that sum is unlikely satisfy demand through al of those 12 months. The Scottish Government announced in its budget statement last week that, unfortunately, Government assistance for first time buyers remains available under the Help to Buy New Build Scheme was being withdrawn. Assistance may also available (where funding has not been exhausted) to First Time Buyers (and certain other designated groups) under the LIFT Open Market Shared Equity Scheme. Funding is limited and is subject to maximum price thresholds that are fixed by reference to the number of rooms in the house being purchased, and the area within which it is being purchased.
More information on these schemes, and assistance with Applications, is available from Mortgage Advisers.
A significant concern for first time buyers is the deposit. And increasing prices means larger deposits. There was a concern last year when some of the major mortgage lenders pulled their maximum lending back to 85% of the value of the property being purchased. Finding 15% of the value of the property (plus, quite possibly in the current market, the sum necessary to pay a premium over valuation to secure a property) means finding a significant sum. Fortunately, most lenders have reversed their policy and will now lend 90% (and in some cases, more) of value. Mortgages are relatively cheap because interest rates are so low. Costs can be fixed by choosing fixed-rate products to protect against rising interest rates in the short to medium term. There is never a bad time to get onto the property ladder but if there is a word of caution for first time buyers, it is that that they do not pay an inflated price for a property that, as a first home, they may themselves be looking to sell again in 3 or 4 years time.
Can I move house during lockdown?
Buyers and sellers may understandably think that the First Minister’s statements referring “lockdown” automatically meant the near-closure of the property market, as was the case when we went into lockdown last March. That is not, however, the case. All activities associated with moving house are still permitted, provided all relevant guidelines relating to social distancing, and ensuring that the risk of transmission of the virus is minimised, are adhered to.
So, houses can still be appraised. Home Report inspections can still be carried out. Homes can be brought to the market. Viewings are permitted (though wherever possible, virtual viewings are to be used and encouraged). Offers can be made and accepted. Mortgage applications can be processed. Home moves can still take place (including cross-border moves).